Guidance

Practice guide 18: franchises

Updated 6 April 2018

Applies to England and Wales

Please note that HM Land Registry’s practice guides are aimed primarily at solicitors and other conveyancers. They often deal with complex matters and use legal terms.

1. Introduction

One form of franchise is a right granted by the Crown or, to use the classic definition, “a royal privilege or branch of the royal prerogative subsisting in the hands of a subject, by grant from the King”. See, for example, Spook Erection Ltd v Secretary of State for the Environment [1989] QB 300, 305.

It is this form of franchise that is the subject of this guide, rather than the modern concept of a commercial franchise.

2. Nature of franchise

A franchise requires a grant from the Crown in the form of a charter or letters patent. It may also be claimed by prescription (which presupposes a grant that has been lost).

It is likely that franchises were also validly granted in the past by certain Lords who had palatine powers (“jura regalia”) within their Lordships. These are the Earls of Chester, the Earls and Dukes of Lancaster, the Earls and Dukes of Cornwall and the Bishops of Durham.

A franchise does not carry with it ownership of the physical land and is distinct from the freehold or leasehold estates in land.

The most common franchise is the right to hold a market or fair. A right of market confers on the owner a monopoly right, that is to say the exclusive right to hold markets within a radius of 6 ⅔ miles (Birmingham City Council v Anvil Fairs [1989] 1 WLR 312, 313). A fair is a market held at rarer intervals (Wyld v Silver [1963] Ch 243, 261).

A market franchise can be confiscated by the Crown or abolished by Act of Parliament (Wyld v Silver [1963] Chapters 243, 255 and 263).

A statute may abolish a market franchise by granting similar rights (Manchester Corpn v Lyons (1882) 22 Ch D 287). Where a statutory market has replaced a franchise market, it is not possible to register the original franchise market.

3. Registration of franchises

Formerly, a franchise was not capable of separate registration, but from 13 October 2003 it has been possible to register title to certain franchises. Registration of franchises is voluntary and the triggers to compulsory first registration listed in section 4 of the Land Registration Act 2002 do not apply.

To be capable of registration, a franchise must constitute a legal estate and be either:

• perpetual
• for a term of years absolute with more than seven years unexpired

Registration of a franchise does not prejudice a right of the Crown to forfeit the franchise (rule 196B of the Land Registration Rules 2003).

4. Affecting franchises and relating franchises

4.1 Types of franchise recognised by the Land Registration Act 2002

The Land Registration Rules 2003 distinguish between two types of franchise.

A franchise can be either:

• an ‘affecting franchise’ – “a franchise which relates to a defined area of land and is an adverse right affecting, or capable of affecting, the title to an estate or charge”
• a ‘relating franchise’ – “a franchise which is not an affecting franchise” (rule 217(1) of the Land Registration Rules 2003)

4.2 Relating franchises more common

We believe that most franchises are relating franchises.

In particular, there is strong authority for the view that a market franchise will be a relating franchise. Even if the market franchise relates to an area that can still be defined, it does not appear to give the franchise-holder the right to enter the land without the landowner’s consent (Attorney-General v Horner (1884) 14 QBD 245, 254 – 255, 260. (Affirmed (1885) 11 App Cas 66 HL)), and so does not confer property rights adversely affecting the title to any estate or charge.

4.3 Registration of a relating franchise

The Land Registration Rules 2003 allow for the registration of a relating franchise without a title plan (rule 5 of the Land Registration Rules 2003).

As a result such a franchise:

• will be described verbally in the property register
• will not be shown on the index map but will instead be recorded in the index of relating franchises and manors, which is a verbal index (rule 10 of the Land Registration Rules 2003)

We can only enter a notice in respect of the burden of an adverse right affecting the title to an estate or charge (sections 32(1) and 132(3)(b) of the Land Registration Act 2002). It follows that relating franchises cannot be noted in the titles of those registered estates falling within the area of the franchise.

It is HM Land Registry’s view that unregistered relating franchises have never been unregistered interests in land because they did not affect a registered estate so they were never an “overriding interest”. Therefore, unlike affecting franchises, they were not affected by section 117 of the Land Registration Act 2002 (see Loss of overriding interest status).

But where a relating franchise has been enjoyed in a particular venue, such as by agreement with the landowner, then that agreement may be protected by notice in the register of the land subject to the right. Similarly a right akin to a prescriptive easement to enjoy the franchise in a particular venue may have been acquired. That, too, may be protected in the register of the land affected.

Nonetheless it is HM Land Registry’s view that even the acquisition of such a right does not turn a relating franchise into an affecting franchise.

4.4 Registration of an affecting franchise

If you have grounds for believing that the franchise you seek to register is an affecting franchise, and you wish us to register it as such, you must make this clear in the application for registration.

If we believe it to be more likely than not, on the evidence supplied, that the franchise is an affecting franchise, we will:

• serve notice on all the registered proprietors of estates in land, charges and relevant franchises within the defined area of the franchise
• seek to give notice to the unregistered owners, chargees and relevant franchise-holders

Exactly how we do this and what information we require for it to be done will depend on the circumstances of the particular case.

It should be noted, however, that if a franchise is an affecting franchise, the defined area of land which it affects will be the defined area of land at the date of its grant. In the case of a presumed lost grant the defined area will depend upon the circumstances (Loose v Lynn Shellfish Ltd [2014] EWCA Civ 846).

Only if there are no objections, or all the objections are groundless or disposed of (by agreement or proceedings), can the registration proceed and notice of the affecting franchise be entered in all the registered titles affected.

A registered affecting franchise will:

• have a title plan
• be shown on the index map

5. Documents to be lodged

When applying for the first registration of a franchise, you must provide:

• form FR1 for each franchise that is claimed. Markets and fairs are separate franchises so even if a charter grants both a market and a fair, a separate application should be made for each. As well as appearing correct in law, there are good practical reasons for this, since the market and fair can be dealt with separately and one will often be leased without the other. If however the charter grants more than one fair, for example, these may be treated as one franchise and registered under a single title
• a certified copy of the charter or letters patent granting the franchise. If the document is in Latin, we will also require a translation
• where the application is for first registration of an affecting franchise, a plan showing the extent of the land affected and sufficient detail to allow us to identify the land clearly on the Ordnance Survey map
• if the application is for first registration of a relating franchise, details of the current administrative area (the county or unitary authority) in which the franchise operates
• all documents proving devolution of title to the applicant in accordance with normal conveyancing practice. Please note that it is not sufficient to just prove the original grant of the franchise, you must also prove the devolution of title to the applicant.
• all other deeds and documents relating to the title to the franchise and in the applicant’s control (‘control’ means “physical possession, or the right to possession, or the right to take copies of the document”, rule 217(1) of the Land Registration Rules 2003
• if the applicant is unable to produce a full documentary title, evidence to account for the absence (see practice guide 2: first registration of title where deeds have been lost or destroyed)
• if the claim is based on prescription, evidence in one or more statutory declarations or statements of truth of at least 20 years’ enjoyment
• form DL in duplicate listing all the documents lodged
• the appropriate fee. This is a scale 1 fee based on the value of the interest being registered. Article 2(6) (voluntary registration: reduced fees) does not apply to the first registration of franchises

Please note that you may make an application for first registration on the basis of certified copy deeds and documents only. For information about this see practice guide 1: first registration – Applications lodged by conveyancers – acceptance of certified copy deeds. Remember that where you choose to make your application on the basis of certified copy deeds and documents only, this must still include evidence of the chain of title to the applicant.

6. Application for a restriction in Form A

Where a person or persons apply to be registered as proprietor(s) of a franchise and a sole proprietor or survivor of joint proprietors will not be able to give a valid receipt for capital money, application must be made for entry of a restriction in Form A (rules 94(2) and (3) of the Land Registration Rules 2003). The application should be made in form RX1 or where an HM Land Registry form of transfer has been used for the disposition to the applicant, in that form.

7. Service of notice on the Crown

We may want to serve notice of an application for registration of a franchise on a representative of the Crown.

You should lodge any relevant correspondence with the Crown as part of the application.

In the case of a franchise of wreck, or royal fish (a whale, porpoise, or sturgeon caught near the British coast or cast ashore there. In these circumstances they belong to the Crown or, in the Duchy of Cornwall, to the Prince of Wales), we will serve notice on the Receiver of Wreck.

It is possible that we may consider serving notices on other parties who may have an interest.

8. Class of title

Unlike applications for first registration of an estate in land, it is often difficult for the owner of a franchise to prove their title to it to the satisfaction of the registrar; an owner of an estate in land can show physical possession of it but the owner of a franchise cannot do this.

While the evidence of the original grant may be lodged together also with a modern title stretching back, say, 15 or 30 years, there will often be a gap of many centuries for which no information is available. Unless HM Land Registry is completely satisfied with the evidence that is lodged, a qualified title may be offered. This is particularly the case where the franchise is based on a manorial grant. See practice guide 1: first registrations.

9. Loss of overriding interest status

Before 13 October 2013, franchise property rights adversely affecting land (perhaps a right of entry) are overriding interests (Paragraph 10 to Schedule 1 and Paragraph 10 to Schedule 3 of the Land Registration Act 2002), which means that they automatically bound the owners of the land involved (sections 11, 12, 29, 30 of the Land Registration Act 2002).

At midnight on 12 October 2013 they lost their automatic overriding status and they now need to be protected in the register. Applicants for registration have a duty on all first registrations, or upon a disposition of registered land, to disclose such franchise property rights of which they have knowledge and which affect their property. For further information see practice guide 15: overriding interests and their disclosure.

Additionally those with the benefit of franchise property rights that have not been protected in the register can apply for them to be noted in the register of a title that is subject to them provided they bind the then registered proprietors. A fee is payable under the current Land Registration Fee Order for such an application (see HM Land Registry: Registration Services fees). Where the land is not registered, franchise property rights can be protected by a caution against first registration. For further information see practice guide 66: overriding interests losing automatic protection in 2013.

10. Objections and disputes

10.1 Possibility of objection

Disputes involving franchises are most likely to occur where an application has been made for registration of a franchise as an affecting franchise, or to note franchise property rights have been noted resulting in the registered proprietor applying to cancel the unilateral notice, and one of the people served with notice objects to the application.

10.2 Requirements for objection

Any person wishing to object to an application must deliver to the registrar a written statement signed by them or their conveyancer. It must state that the objector objects to the application, state the grounds for the objection and give the objector’s name and address to which communications may be sent (rule 19 of the Land Registration Rules 2003).

10.3 Consideration of objection by HM Land Registry

If we receive an objection, then it will not be possible to determine the application until the objection is disposed of, unless the registrar is satisfied that the objection is groundless (section 73 of the Land Registration Act 2002).

If the objection is not groundless, we must give notice of the objection to the applicant (section 73(5) of the Land Registration Act 2002). We will then ask both parties:

• whether they wish to negotiate
• whether they consider that it may be possible to reach an agreement

If all parties respond positively, we will allow them time to settle the matter by agreement. However, as soon as it becomes clear that the two sides are unable to reach an agreement we must refer the matter to the tribunal (section 73(7) of the Land Registration Act 2002). We will do this immediately if the parties do not wish to negotiate.

The tribunal will then either:

• set a date to hear and determine the matter
• direct one of the parties to start proceedings in court. If it decides to hear the matter, further details of the procedure to be followed and of the position as to costs will be supplied by it

11. Subsequent dealings with a registered franchise

The owner of a franchise may deal with it in much the same way as other registered estates. For example, the owner may sell or lease the franchise.

The sale or grant of a lease of a registered franchise must be registered (section 27(2)(c) of the Land Registration Act 2002) and will not operate at law until the registration requirements have been met (section 27(1) of the Land Registration Act 2002).

If the term of the lease is for more than seven years, registration will take the usual form of opening a new title and entering notice in the register of the lessor’s title (Paragraph 4 to Schedule 2 of the Land Registration Act 2002). If the term does not exceed seven years, the registration requirement is simply that notice be entered in the lessor’s title (Paragraph 5 to Schedule 2 of the Land Registration Act 2002).

The effect of the rule of priority on dispositions of registered estates under section 29 of the Land Registration Act 2002 is altered in relation to franchises, so that a right of the Crown to forfeit the franchise is a ‘protected interest’ for the purposes of section 29(2)(a) (rule 196(2) of the Land Registration Rules 2003).

12. Things to remember

We only provide factual information and impartial advice about our procedures. Read more about the advice we give.